The Role of Tariffs in U.S. Business

Tariffs have long been a key factor in international trade, affecting businesses that import goods into the United States. These government-imposed duties can significantly impact the cost of products, supply chain decisions, and overall profitability. Companies must decide how to handle tariff-related costs – whether to absorb them as expenses or incorporate them into product pricing. This decision should always be made in consultation with a financial professional, as it can influence financial statements and tax obligations.

For businesses using AccountMate, managing tariffs is straightforward and flexible. Whether a company chooses to capitalize or expense tariffs, AccountMate provides the tools to properly account for these costs, ensuring accurate financial reporting and cost tracking.

Capitalizing Tariffs Using Landed Cost in AccountMate

If a company decides to capitalize tariffs – meaning they add the cost of tariffs to the value of their inventory – AccountMate’s Landed Cost feature within the Purchase Order (PO) module makes this process seamless. The Landed Cost feature allows businesses to allocate the tariff costs in a way that best fits their operations, including:

• By weight – Distributing the cost based on the weight of the imported items.
• By item value – Allocating costs in proportion to the value of each item.
• By user input – Allowing users to manually assign costs per item based on a variety of factors, including business strategy, supply chain considerations, and specific operational requirements.

By capitalizing tariffs, businesses can better reflect the true cost of their inventory, which may be beneficial for pricing and profitability analysis.

Expensing Tariffs Using AccountMate’s AP Module

For businesses that choose to expense tariff costs instead – meaning they treat it as an operational cost rather than adding it to inventory value – AccountMate’s Accounts Payable (AP) module provides an easy way to record these expenses. Using the AP Invoice Transactions function, companies can track tariff costs as an expense without affecting inventory valuation.

This approach may be preferable for businesses that want to separate tariff costs from inventory pricing, particularly when they view tariffs as an operational cost rather than a component of product value.

AccountMate’s Flexibility in Managing Tariffs

Regardless of how a company chooses to handle tariffs, AccountMate offers the flexibility to manage these costs efficiently. The system has long supported both capitalization and expensing methods, allowing businesses to adapt based on their accounting strategies. However, AccountMate does not dictate how tariffs should be handled – that decision is best made in consultation with a financial professional.

With AccountMate’s robust features, businesses can confidently manage tariffs while maintaining financial accuracy and compliance. Whether integrating tariffs into inventory costs or tracking them as expenses, AccountMate ensures companies have the tools they need to stay in control of their finances.

To get started with AccountMate, you need to work closely with experienced ERP consultants who can guide you through the selection and implementation process, ensuring that your ERP system aligns with your business’s immediate needs and long-term vision.

Are you considering a new ERP system? Contact our experts! We have local solution providers who can help you navigate the process. Contact us now or call 707-774-7537 to talk to someone about your specific needs.